Transition Provision Under GST

Chapter XX of CGST Act
Read with CGST Rules & Notifications prescribed
Compiled By –
Bharat Trivedi | Executive | Indirect Tax Vertical
Asija & Associates LLP | Chartered Accountants
gst@asija.in

TABLE OF CONTENTS
1. What is Transition and what is the need to incorporate transition provisions?
2. How to Claim Input Tax Credit (ITC) in GST w.r.t CENVAT earned in previous Law?
3. How to Claim Input Tax Credit (ITC) in GST w.r.t VAT & Entry Tax earned in previous Law?
4. What are the conditions prescribed for taking un-availed CENVAT credit in case of capital
goods?
5. Can a person who was unregistered in the current regime, carry forward ITC? Are there any
conditions prescribed for the same.
6. Whether a person providing/manufacturing Taxable and Exempt service/goods under
the current regime, be eligible to transfer ITC to his Electronic Credit Ledger?
7. Where inputs/input services are received on or after the appointed date, but tax paid by
supplier under existing law. Whether credit can be taken?
8. Subject to what conditions can a person paying tax at a fixed rate/fixed amount carry
forward ITC?
9. How will a person having Centralized Registration under current regime, be allowed to
take ITC to his Electronic Credit Ledger?
10. Miscellaneous Provisions.
GST Wing | Asija & Associates LLP gst@asija.in

NEED FOR TRANSITION
 What is Transition and what is the need for incorporating Transition
provisions under GST Law?
1. Major concern for businesses is availability and eligibility for claiming ITC
when previous indirect tax regime changes to GST. Thus, Transition provisions
have been incorporated.
2. Transition Provisions are temporary provisions to enable the earlier taxpayers
to migrate to GST with ease.
 If you are left with old stock as on 30/06/2017, can you claim ITC on such
stock?
1. YES, any business whether registered or not under pre-GST regime will be
entitled to claim ITC, subject to a few conditions prescribed.
2. Fill GST Transition Form: TRAN-1 or TRAN-2
3. Sell your old stock within 6 months from 01/07/2017.

NEED FOR TRANSITION
 How will I decide which Transition Form to fill?
1. Every registered person under GST, whether registered or unregistered
under pre-GST regime shall file GST TRAN-01, if he wish to claim benefit of
Indirect Tax paid under previous law.
2. Every registered person under GST, satisfying all of the following conditions,
shall file GST TRAN-02.
1. Was unregistered under pre-GST (under any of the earlier law)
2. Does not possess invoice/other tax paying document
3. Not a manufacturer under Central Excise
4. Not a service provider under Service Tax

TRANSFER OF CENVAT TO ITC – Sec-140(1)
 How to Claim Input Tax Credit (ITC) in GST w.r.t CENVAT earned in previous
Law?
1. A registered person (other than paying tax under Composition scheme) shall
1. Be entitled to take ITC to his Electronic Credit Ledger,
2. Of the CENVAT credit as on 30/06/2017
3. Which is shown in return furnished by such person, due under Previous law,
before the date of implementation of GST.
2. Such registered person shall not be entitled to take credit if:
a) Such credit amount is not admissible as ITC under GST.
b) He has not furnished all returns for the past 6 months before 01/07/2017.
c) Such Input credit relates to exempted goods under GST
3. Every registered person entitled to take credit of input tax shall, within 90 days
from 01/07/2017 submit a declaration electronically in Form GST TRAN-1.
4. Amount of credit specified in GST TRAN-1 shall be credited to the Electronic Credit
ledger maintained in Form GST PMT-2.

TRANSFER OF VAT & ENTRY TAX TO ITC
 How to Claim ITC in GST w.r.t VAT & Entry Tax earned in previous Law?
 Be entitled to take ITC to his Electronic Credit Ledger,
 Credit Of the VAT & Entry Tax as on 30/06/2017,
 Which is shown in return furnished by such person, due under Previous law,
before the date of implementation of GST.
2. Such registered person shall not be entitled to take credit if:
a) Such credit amount is not admissible as ITC under GST.
b) He has not furnished all returns for the past 6 months before 01/07/2017.
3. Credit attributable to any claim related to “Form C or H and Certificate H or I” which
is not substantiated in the manner, and within the period, prescribed in Rule 12 of
the Central Sales Tax Rules, 1957 shall not be eligible to be credited to the electronic
credit ledger
4. An amount equivalent to the credit specified in Point 3 shall be refunded under the
existing law when the said claims are substantiated in the manner prescribed in rule
12 of the Central Sales Tax Rules, 1957.

ITC OF UN-AVAILED CENVAT & State Tax ON
CAPITAL GOODS
 What are the conditions prescribed for taking Un-Availed CENVAT Credit in
case of Capital Goods?
 Be entitled to take ITC to his Electronic Credit Ledger,
 Of Un-availed CENVAT credit in respect of Capital goods
 On which CENVAT credit have not be carried forward in a return furnished
under the existing law.
2. Such credit can be taken if it was admissible under the previous law and is also
admissible under GST Law.
3. Such person while filing GST TRAN-1 should specify separately for Every Item of
Capital goods :
 Amount of tax or duty, under each of the previous laws
 Availed or Utilized till 30/06/17
 Yet to be utilized by way of Input Tax Credit as on 01/07/17

TRANSITION FROM EXEMPT TO TAXABLE SUPPLIER –
ITC ON EXISTING STOCK HELD ON 01/07/2017
 Can a Person claim ITC on the stock held on 01/07/2017, if the said person was
unregistered / exempt in the previous Law, but is supplying taxable goods or
service under GST?
 Person unregistered / exempt* in the previous Law shall be entitle to take credit
of ITC of “ELIGIBLE DUTIES”** in respect of inputs held in Stock, Semi-finished or
finished goods on 01/07/2017 subject to the following conditions
 Such inputs will be used for making taxable supplies under GST.
 Such person is eligible for ITC on inputs under GST.
 Such person to have invoice* showing payment of tax under the previous law for
all such inputs.
 Such invoices or other prescribed documents were issued not earlier than 12
months immediately preceding 01/07/2017
 Supplier of service is not eligible for any abatement under GST.

* UNREGISTERED/ EXEMPT PERSONS
 Who are those specified persons unregistered / exempt in the previous Law, who
can claim ITC on their Stock held on 01/07/2017?
 Following are the unregistered persons:
 Person not liable to be registered under previous law *. (we should define the
same too)
 Person engaged in the manufacture of exempted goods or
 Person engaged in providing exempted services.
 Person providing Works Contract Service and availing the benefit of notification
26/2012 (Abatement under Service Tax).
 1st stage dealer or 2nd stage dealer.
 Registered importer or depot of manufacturer.

 Following are the Eligible Duties of which ITC can be taken?
1. The additional duty of Excise leviable u/s 3 of the Additional Duties of
Excise(Goods of Special Importance) Act,1957.
2. The additional duty leviable u/s 3(1) of Customs Tariff Act,1975
3. The additional duty leviable u/s 3(5) of Customs Tariff Act,1975
4. The additional duty of excise leviable u/s 3 of the Additional Duties of
Excise(Textile and Textile Articles) Act,1978
5. The duty of Excise specified in the 1st Schedule to the Central Excise Tariff
Act,1985
6. The duty of Excise specified in the 2nd Schedule to the Central Excise Tariff
Act,1985
7. National Calamity Contingent Duty
** ELIGIBLE DUTIES

 A registered person,
 Who was not liable to be registered under the previous law *. (we should define the same
too)
 Who was engaged in the sale of exempted goods or tax free goods or
 Goods which have suffered tax at the first point of their sale in the State and the
subsequent sales of which are not subject to tax in the State under the existing law but
which are liable to tax under this Act or
 Where the person was entitled to the credit of input tax at the time of sale of goods, if any,
 Shall be entitled to take, in his electronic credit ledger, credit of the value added tax
in respect of inputs held in stock and WIP or Finished Goods on 01/07/2017 subject
to the following conditions
 Such inputs or goods are used or intended to be used for making taxable supplies under
this Act;
 The said registered person is eligible for input tax credit on such inputs under this Act;
 The said registered person is in possession of invoice or other prescribed documents
evidencing payment of tax under the existing law in respect of such inputs; and
 Such invoices or other prescribed documents were issued not earlier than 12 months
immediately preceding 01/07/2017
TRANSITION FROM EXEMPT TO TAXABLE SUPPLIER –
ITC ON EXISTING STOCK HELD ON 01/07/2017(UP-GST)

FURNISHING GST TRAN-2
 When will an assesse have to furnish GST-TRAN 2?
1. A registered person who was unregistered under the previous law, shall be allowed
to avail ITC on goods held in stock on 01/07/2017 where he is not in possession of
any document evidencing payment of central excise duty.
2. Input credit shall be allowed in the following manner:
 On goods where Central & State Tax is greater than or equal to 18% = 60%
 On goods where Central & State Tax is less than 18% = 40%
 On goods where Integrated Tax is greater than or equal to 18% = 30%
 On goods where Integrated Tax is less than 18% = 20%
3. Credit shall be available subject to following conditions:
 Such goods were not unconditionally exempt from whole of excise duty or were
not nil rated as per Schedule 1 to CETA, 1985.
 Document for Procurement of such goods are available with registered person
 Registered person availing this scheme to submit FORM GST TRAN-2 at the end
of each of 6 tax periods during which scheme is operational.
 On filing of FORM GST TRAN-2, the amount of ITC claimed under 140(3)
through Trans -1 shall be credited to Form GST PMT -2.

SUPPLIER PROVIDING TAXABLE & EXEMPT SUPPLIES
UNDER PREVIOUS LAW – ITC ON EXISTING STOCK HELD
ON 01/07/2017
 Can a Person claim ITC on the stock held on 01/07/2017, if the said person was
 Manufacturer of Taxable as well as Exempt Goods under Central Excise Act OR
 Providing Taxable as well as Exempt Service under Service Tax Law and
 Its goods or service, which were exempt under previous law is now taxable under
GST Law from 01/07/17.
 Yes The said person shall be entitled to claim ITC of the amount of CENVAT
credit:-
 Carried forward in a return furnished under the existing law if the following
conditions are satisfied:
 Credit should be admissible as ITC under GST
 Assesse has furnished all returns under existing law for 6 months immediately
preceding 01/07/2017
 Such credit should not relate to exempted goods.

 Further such registered person shall be entitled to take amount of CENVAT credit of
eligible duties in respect of inputs held in stock, inputs in semi-finished state,
finished goods held in stock on 01/07/2017 subject to following conditions:
 Such inputs/goods are used or intended to be used for making taxable supplies
under GST
 Such registered person is eligible for ITC on such inputs under GST
 Such registered person is in possession of invoice/other documents evidencing
payment of tax under existing law in case of such inputs
 Such invoices/other documents were issued not earlier than 12 months
immediately preceding 01/07/2017
 In case of supplier of services, he should not be eligible for any abatement under
GST.
SUPPLIER PROVIDING TAXABLE & EXEMPT SUPPLIES
UNDER PREVIOUS LAW – ITC ON EXISTING STOCK HELD
ON 01/07/2017

INPUTS RECEIVED AFTER APPOINTED DATE,TAX
PAID PRIOR TO APPOINTED DATE
Where inputs/input services are received on or after 01/07/2017, but tax has
been paid by supplier under previous law. Whether credit can be taken?
 A registered person shall be entitled to take to his Electronic Credit Ledger the credit
of eligible duties and taxes in respect of inputs received on or after 01/07/2017 but
duty or tax has been paid by supplier under previous law subject to the following
conditions:
 Invoice or any other tax paying document of the same was recorded in the books
of account of such person within a period of 30 days from 01/07/2017.
 Upon showing sufficient cause, such period may be extended by the
commissioner for a further period not exceeding 30 days.
 Such registered person shall furnish a statement*, in respect of credit that has
been taken.

DETAILS TO BE SPECIFIED
1. The name of the supplier, serial number and date of issue of the invoice by the
supplier or any document on the basis of which credit of input tax was admissible
under the existing law;
2. The description and value of the goods or services;
3. The quantity in case of goods and the unit or unit quantity code thereof;
4. The amount of eligible taxes and duties or, as the case may be, the value added
tax [or entry tax] charged by the supplier in respect of the goods or services; and
5. The date on which the receipt of goods or services is entered in the books of
account of the recipient

INPUT TAX CREDIT FOR PERSONS PAYING TAX AT A
FIXED RATE/FIXED AMOUNT
 Subject to what conditions can a person paying tax at a fixed rate/fixed amount
carry forward ITC?
 A registered person, either paying tax at a fixed rate or paying fixed amount under
the existing law, shall be entitled to take to his ECL, credit of eligible duties in respect
of inputs held in stock, semi-finished inputs or finished goods subject to the following
conditions:
 Such inputs are used or intended to be used for making taxable supplies.
 Such registered person is not paying tax under Composition Scheme.
 Such registered person is eligible for ITC on such inputs under GST
 Such registered person has invoice or any other document evidencing payment of
tax under the existing law.
 Such invoice was issued up to 12 months preceding the appointed date.

ITC FOR PERSON HAVING CENTRALISED
REGISTRATION IN EXISTING LAW
 How will a person having Centralized Registration under previous regime, be
allowed to take ITC to his ECL?
 Where a registered person having Centralized Registration under the previous law
has obtained registration under GST , such person will be allowed to take to ECL
CENVAT Credit carried forward in a return furnished under the previous law up to
30/06/2017
 If such person gives return for the period ending 30/6/17 within 3 months from
01/07/2017 such credit shall be allowed subject to condition that:
 The said return is either an original return or a revised return where the credit
has been reduced from that claimed earlier.
 Registered person shall not be allowed to take credit unless said amount is
admissible as ITC under GST.
 Such credit may be transferred to any of the registered person having same PAN,
for which centralized registration was taken.

MISCELLANEOUS PROVISIONS
 What provision shall apply when goods on which duty has been paid in the
previous regime, are returned back to the supplier?
 Where goods on which duty has been paid in the previous regime, not earlier than 6
months prior to 01/07/2017, are returned back to the supplier within 6 months
after the appointed date then:
 If goods are returned by an UNREGISTERED DEALER-Manufacturer can
claim refund of duty paid.
 If goods are returned by a REGISTERED DEALER-It will be considered as an
outward supply in the hands of dealer and manufacturer can claim ITC.

 Mr. A entered into a contract with XYZ Ltd on 25/06/2017 for providing
services. Due to market fluctuations, price revisions had to be made on
05/07/2017. What are the provisions prescribed regarding the same?
 Where a contract was entered before 01/07/2017 and there is price revision on or
after 01/07/2017 then:
 In case of Upward Price Revision: Registered person to issue a Debit Note to
the buyer within 30 days of such price revision.
 In case of Downward Price Revision: Registered person to issue a Credit Note
to the buyer within 30 days of such price revision. supplier is allowed to
reduce tax liability only if buyer reduces his ITC in returns.

 How will Refunds be processed under the GST regime?
 Every claim for refund filed before, on or after the 01/07/2017 for refund of any
amount of CENVAT Credit ,duty, tax, interest or any other amount paid under the
existing law shall be disposed of in accordance to the provisions of the Existing
Law.
 The amount accruing to such person will be paid in cash.
 Where any claim for refund of CENVAT credit is fully or partially rejected, the
amount so rejected shall lapse.
 No refund shall be allowed of any amount of CENVAT credit, where balance of said
amount as on 01/07/2017 has been carried forward under GST.

 What are the provisions regarding returns furnished under existing law, being
revised after 01/07/2017?
 Where any return furnished under existing law, is revised after 01/07/2017 and due
to such revision any amount becomes recoverable or CENVAT credit is found
inadmissible, such amount shall be recovered as an arrear of tax under GST, if not
recovered under existing law.
 Where such return is revised after appointed day, but within time limit specified
for such revision under existing law due to which any amount becomes
refundable or CENVAT credit is found admissible, such amount shall be refunded in
cash.

This presentation has been prepared to provide a gist of the applicable law pertaining
to GST as issued till date. (06/09/2017)
For detailed insight and for better understanding of the various provision of the law,
the said presentation should be read along with related provision of CGST Act, IGST
Act, SGST Act & related rules.
We shall not be responsible for any decision taken on the basis of the said
presentation, without obtaining our professional guidance or consultation on the
matter for which reliance was made on this presentation.”
DISCLAIMER

THANK YOU
FOR ANY QUERIES KINDLY CONTACT OUR GST TEAM :
ASIJA & ASSOCIATES LLP
CHARTERED ACCOUNTANTS
H.O. : 34/5 , GOKHALE MARG, LUCKNOW
PH. NO. : 0522-4004652,2205072
gst@asija.in
CA Rahul Mishra
Partner
(rahul.mishra@asija.in)
CA Amber Agrawal
Associate Director
(amber.agrawal@asija.in)
CA Ashish Kapoor
Partner
(ashish.kapoor@asija.in)

Transition Provision Under GST

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